A new Russian law requires companies to store Russians' data within Russia's borders, out of reach of the NSA, and in reach of Russia's own secret police. We only have to look at recent history in China to see where this is headed, in my humble opinion.
I suspect we can thank Edward Snowden's revelations and the reaction of the world's governments to them to explain this, but clearly Vladamir Putin's Russia is displaying more of an authoritarian control over its citizens that is reminiscent of Iran's or China's governments than it is of Western democracies.
The Russian law utilizes copyright enforcement as its raison d'être, which is nothing new for Putin's regime: when Russian cops seized the computers of independent newspapers under the rubric of hunting for pirated software, they also "just happened to secure" journalists' confidential sources and notes. It allows the state the right to censor the press for alleged infringement.
Russia's new legislation squashes the democracy of the internet to achieve a status similar to that of neighbor China: a huge market for Internet users, with a massive censorship system that can block non-compliant foreign Internet services. In China, this has resulted in companies like Yahoo and Google locating their servers within the grasp of Chinese spies (who used them to hack both the American Internet companies and spy on internal dissidents, prompting Google to eventually leave China), as the only way to get access to the market and compete with homegrown, regime-friendly services. While one can sniff and turn up their nose at such governmental maneuvers as "high handed, totalitarian nonsense that will suffer the wrath of the market", history suggests that free market economies may avoid Russia, but, in the process, convey acceptance of the precedent in the process.
Compliance to access to the Russian Internet market will likely tread down a well trodden path -- a few years' worth of complicity in attacks on activists, assisting imprisonment of people who use curse words (but only if they're the sort of people the Kremlin needs an excuse to jail) -- only to find your company exorcised from the Russian economy when it serves the government's needs, its servers seized, and a locally run business like Yandex or Vkontakte getting your market-share.
Vkontakte? That's the "Russian Facebook" -- the site's founder Pavel Durov was apparently forced to sell his stake in the company earlier this year, after taking part in anti-Putin rallies. The new owner is a Kremlin-affiliated oligarch whose fortune was Kickstarted by fire-sale-priced access to media assets seized from another oligarch who'd fallen out of Kremlin-favor.
We have watched this battle playing out already with such leading hi-tech enterprises such as Yahoo, Google and Microsoft doing their best to quietly comply with governmental requests without kicking up too much publicity. No doubt China, Russia and others have taken this into account when assessing if they can get away with such policies onto the world stage.